Dive Brief:

• Farmstead, an e-grocery startup that launched earlier this month in San Francisco, announced it’s now offering a free “Express Pickup” service that allows customers to pick up their online orders just thirty minutes after placing them, according to a news release.
• The company, which also offers one-hour delivery, will fill orders through a series of staffed “micro-hubs” located around San Francisco and San Mateo. Customers place their order, drive to the location and then hit an “I’m Here” button on their phone, which prompts a Farmstead employee to deliver the order to the shopper’s car.
• Farmstead uses AI technology to optimize its sourcing and distribution. So far, the company has made 17,000 deliveries to customers and has raised $2.8 million in funding.

Dive Insight:

In an e-commerce grocery field that includes incumbents Amazon and Instacart along with a flood of new startups, Farmstead is betting on speed to help it stand out from the competition.

With its new 30-minute pickup option, Farmstead, which refers to itself as a technology company rather than a grocer, has established the fastest order fulfillment time in the U.S. industry. This should grab the attention of many tech-savvy, food-focused Bay Area shoppers, and may convert them into regular shoppers by allowing them to order right before they head home from work.

Across the U.S., grocers are offering click-and-collect services at their stores. It’s a lower-cost investment for retailers than home delivery, and effectively harnesses the physical store for order fulfillment. However, getting orders to customers more quickly will likely require grocers to do as Farmstead has done and offer pickup kiosks located closer to their homes.

This model hails from Europe, where online grocery adoption is roughly twice that of the U.S. France’s Drive service, for instance, offers more than 3,000 pickup locations throughout the country, and has become a growth engine for retailers like E. Leclerc. In England, grocers like Tesco and Morrison’s have built kiosks that operate similar to Amazon Lockers for order pickup.

Interestingly, Farmstead isn’t the first company to offer 30-minute pickup service. A Sainsbury’s store in Pimlico, England is began trialing the speedy service, which it offers on orders of 25 items or less, in August.

Will speed ultimately deliver the loyal customers Farmstead seeks? Interest in online grocery shopping is growing fast, with projections that the channel will comprise 20% of industry sales by 2025. However, the company has the unenviable task of convincing shoppers to skip a trip (or a click) to their favorite grocer and give it a try instead. The promise of free, lightning quick fulfillment may very well convince many to do so, but it’s the execution and product quality that will ultimately bring them back.